Growing Microgrid Markets? An Energy Attorney’s View

Chad Marriott, an associate with Stoel Rives, Portland, who is an active member of the company’s energy development team, says he’s seeing interest first of all from industries with critical loads — hospitals, for example.

In addition, in the Pacific Northwest, certain types of energy-intensive manufacturers –such as microprocessor manufacturers — are looking into microgrids. At these companies critical energy load must be met on a constant basis; they can’t afford energy interruptions.

Industries, hospitals and the military are all looking into microgrids at different levels of involvement.

“When you think about microgrids, you need to understand it means a whole lot of things to a wide range of people. It can be everything from a small island disconnected from the grid with its own on-site generation or microgirds installed on a circuit level.” In the latter case, the business would need to make sure power is flowing to particular operations all the time, and would need to manage energy to ensure power went to those circuits, he says.

Data centers have three priorities, he says: the cost of energy, the security of the energy supply, and having on-site generation.

For the Department of Defense, whose main concern is national security, the bases must operate 24 hours a day. “They’re such big consumers of electricity. In some cases, any hiccup in operations can have serious consequences.”

One example is a US Marine Corps station in San Diego that recently closed on a request for proposals. The station is looking for a grid-connected microgrid that is islandable. (Note: Bids were due March 17; the solicitation is here.)

Companies also install microgrids as a public relations move, says Marriott.

“Internet companies are developing large data centers all over the Pacific Northwest because the power is cheaper here,” he says. “Because these companies are generally high profile, they have a lot more public image issues. There’s an aspect of microgrids that may have to do with public relations. They realize they’re building energy-intensive facilities — and they’re interested in being able to show to customers and investors that they’re still being as environmentally responsible as possible.”

Incorporating microgrids with renewable energy and on-site energy storage facilities can boost a company’s public image, he says.

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“It comes down to the public profile the company wants to have. Some companies decide the renewable energy angle — on-site solar — is a good public relations pitch for them, so they pursue that.”

A major challenge for all of these energy users is cost, he says.

“Depending on how robust you want your system, cost can be a challenge,” he says, especially when the system has “all the bells and whistles.” Advanced microgrids may contain onsite energy storage and complex switches and software.

In spite of the cost challenges, it’s clear the “make-your-own-energy” trend is here to stay, says Marriott.

“Make your own energy is a disruptive trend; on-site generation is not going away,” he says. “It’s a disruptive technology for utilities, and there’s a constant push-and-pull between utilities and end users.”

Homeowners and businesses are focused on energy security and economics.

“They don’t want their power out and want a cheaper supply of power. Incorporating on-site generation can be thought of as hedge against future increases in prices,” he says.

Comments

From a pure commercial perspective, the emergence of microgrids is very compelling. But the range of opportunities is also complex. How have you and your energy development team organized your process to evaluate the various applications?

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